Like 'em or not, incentives key to luring jobs, officials say

Brett Martin, CEO of Castle Branch, speaks at a news conference in March announcing that the employment screening company would bring 420 jobs and invest $10.2 million in a new Wilmington headquarters building. Behind Martin are New Hanover Commissioners Chairman Woody White (left) and Wilmington Mayor Bill Saffo. StarNews file photo

Published: Saturday, May 4, 2013 at 12:15 p.m.

Last Modified: Saturday, May 4, 2013 at 3:16 a.m.

To offer incentives or not offer incentives?

That is the question plaguing local leaders, but those in the economic development field say it really isn’t a question. Without incentives, which come in many forms, a business isn’t going to select your state, county or town.

Incentives aren’t just for Hollywood, either. All industries expect them, forcing politicians who might be against incentives philosophically to now approve packages to lure or sometimes keep local jobs.

Woody White, chairman of the New Hanover County Board of Commissioners, was against incentives on the campaign trail, saying it wasn’t county government’s job to “pick winners” when asked about film incentives during pre-election debates.

But after taking office, he voted for a resolution supporting film incentives and for the incentive package for Castle Branch, an employment screening firm that plans to bring 420 jobs and invest $10.2 million in a new Wilmington headquarters building.

“As a general principle, I do think incentives in general are putting government in the position of picking winners and losers,” White said last week. “It is a different perspective when you’re on the board and you’re looking at real faces and real job creation and real potential. It doesn’t make you like incentives any more but it does make you reconsider your positions sometimes.”

Castle Branch is a prime example of what White is talking about. The firm announced in March it plans to build a $10.2 million, 60,000-square-foot facility and, by 2017, add 420 jobs there, giving the company more than 650 employees in Wilmington. The city of Wilmington and New Hanover County gave $500,000 in incentives to help lure the jobs here. The company also received a state grant from the Job Development Investment Grant program. Under the terms of the award, Castle Branch could receive up to $1.23 million over eight years.

“It is irresponsible for us not to recognize that other communities will take jobs from us or will grow their own jobs if we unilaterally disengage,” White said. “We simply don’t have the luxury of doing that.”

Scott Sullivan dislikes incentives for any industry. But Sullivan, chairman of the Coalition for Economic Advancement, a private economic development advocacy group said the competition surrounding incentives is only going to grow more intense.

“You have to have them or you’re not in the game at all,” said Sullivan, who also is co-founder of Cameron Management, which manages investments of the Cameron family. “If we don’t have a vibrant economy we’re in trouble.”

Scott Satterfield, chief executive officer of Wilmington Business Development, said incentives are often the first topic when a company is scouting new locations.

“We’re dealing with reality here,” Satterfield said. “It’s a very competitive business. If they’re going to invest in us, we’re going to have to invest in them.”

Satterfield said the key to a good package is making sure it protects taxpayers by building in performance requirements.

“They have to perform before any incentives are granted,” Satterfield said.

Robin Spinks, owner of Wilmington-based Greenfield Development and vice chairman of Coalition for Economic Advancement, said communities should establish a formula so companies and residents are working off the same page.

“It takes all of the angst out of the political decision,” said Spinks, who has either found locations for companies or helped lure companies to new locations for more than 30 years.

But White said he weighs incentives on a case-by-case basis.

“For example, a Titan Cement incentive is one I would have never support,” White said. “But looking Castle Branch and the film incentive, I have supported and do support those.”

Film incentives have been the most high profile issue this year after a bill supported by two local lawmakers, Reps. Rick Catlin and Chris Millis, would change the way the state calculates the tax credit. Catlin said last month his bill would put the film incentive “in line” with other incentive packages.

Catlin said last week he favors “incentives that are fair and equitable to all businesses, not a system that encourages government to pick winners and losers at taxpayer expense.” He introduced a bill - HB 791 - in April also with Millis to examine the state’s incentive programs.

“Comprehensive regulatory and tax reform which would make North Carolina become the most favorable state for all businesses to call home is the best solution to our long term economic development goals,” Catlin said. “Achieving this potential economic utopia would eliminate the need for the current economic incentive scheme being played out by government officials.”

For the past two years, North Carolina has had enhanced film incentives to attract TV and movie production companies to shoot in the state. Productions that spend at least $250,000 in the state are eligible for tax credits worth 25 percent of their “qualifying expenses” on films, TV series, commercials or other productions.

Film, television and commercial productions spent more than $275 million in North Carolina and employed about 14,000 people in the past fiscal year, according to N.C. Department of Revenue records. “Iron Man 3” spent nearly $180 million in the state and put nearly 2,000 residents to work while it filmed, according to a new report from the movie industry’s main trade association.

Wilmington Mayor Bill Saffo said the state is investing 25 percent and the film industry is paying 75 percent.

“That is a pretty good investment,” Saffo said. “Here we are talking about jobs and here we have an industry providing good paying jobs and here we are talking about eliminating a good clean industry. I think the investment the state has made in film has definitely paid dividends.”

Saffo said Catlin’s bill not only sends the wrong message to film production companies, but to every company considering a move to North Carolina.

“Until there is such time they outlaw incentives, you’re going to have to play the incentive game,” Saffo said.

Spinks said the main issue is how incentives are being viewed. They are not corporate welfare but a community’s investment in a new business.

“We’ve done a horrible disservice to ourselves by calling it an incentive,” said Spinks. “It is money you never had in the first place. That tax base would not be there if the company wasn’t there. You pay some money up front and you hope it will create a revenue stream over a long period of time.”

<p>To offer incentives or not offer incentives?</p><p>That is the question plaguing local leaders, but those in the economic development field say it really isn't a question. Without incentives, which come in many forms, a business isn't going to select your state, county or town. </p><p>Incentives aren't just for Hollywood, either. All industries expect them, forcing politicians who might be against incentives philosophically to now approve packages to lure or sometimes keep local jobs. </p><p>Woody White, chairman of the New Hanover County Board of Commissioners, was against incentives on the campaign trail, saying it wasn't county government's job to “pick winners” when asked about film incentives during pre-election debates.</p><p>But after taking office, he voted for a resolution supporting film incentives and for the incentive package for Castle Branch, an employment screening firm that plans to bring 420 jobs and invest $10.2 million in a new Wilmington headquarters building.</p><p>“As a general principle, I do think incentives in general are putting government in the position of picking winners and losers,” White said last week. “It is a different perspective when you're on the board and you're looking at real faces and real job creation and real potential. It doesn't make you like incentives any more but it does make you reconsider your positions sometimes.”</p><p>Castle Branch is a prime example of what White is talking about. The firm announced in March it plans to build a $10.2 million, 60,000-square-foot facility and, by 2017, add 420 jobs there, giving the company more than 650 employees in Wilmington. The city of Wilmington and New Hanover County gave $500,000 in incentives to help lure the jobs here. The company also received a state grant from the Job Development Investment Grant program. Under the terms of the award, Castle Branch could receive up to $1.23 million over eight years.</p><p>“It is irresponsible for us not to recognize that other communities will take jobs from us or will grow their own jobs if we unilaterally disengage,” White said. “We simply don't have the luxury of doing that.”</p><p>Scott Sullivan dislikes incentives for any industry. But Sullivan, chairman of the Coalition for Economic Advancement, a private economic development advocacy group said the competition surrounding incentives is only going to grow more intense.</p><p>“You have to have them or you're not in the game at all,” said Sullivan, who also is co-founder of Cameron Management, which manages investments of the Cameron family. “If we don't have a vibrant economy we're in trouble.”</p><p>Scott Satterfield, chief executive officer of Wilmington Business Development, said incentives are often the first topic when a company is scouting new locations. </p><p>“We're dealing with reality here,” Satterfield said. “It's a very competitive business. If they're going to invest in us, we're going to have to invest in them.”</p><p>Satterfield said the key to a good package is making sure it protects taxpayers by building in performance requirements.</p><p>“They have to perform before any incentives are granted,” Satterfield said.</p><p>Robin Spinks, owner of Wilmington-based Greenfield Development and vice chairman of Coalition for Economic Advancement, said communities should establish a formula so companies and residents are working off the same page.</p><p>“It takes all of the angst out of the political decision,” said Spinks, who has either found locations for companies or helped lure companies to new locations for more than 30 years.</p><p>But White said he weighs incentives on a case-by-case basis.</p><p>“For example, a Titan Cement incentive is one I would have never support,” White said. “But looking Castle Branch and the film incentive, I have supported and do support those.”</p><p>Film incentives have been the most high profile issue this year after a bill supported by two local lawmakers, Reps. Rick Catlin and Chris Millis, would change the way the state calculates the tax credit. Catlin said last month his bill would put the film incentive “in line” with other incentive packages.</p><p>Catlin said last week he favors “incentives that are fair and equitable to all businesses, not a system that encourages government to pick winners and losers at taxpayer expense.” He introduced a bill - HB 791 - in April also with Millis to examine the state's incentive programs.</p><p>“Comprehensive regulatory and tax reform which would make North Carolina become the most favorable state for all businesses to call home is the best solution to our long term economic development goals,” Catlin said. “Achieving this potential economic utopia would eliminate the need for the current economic incentive scheme being played out by government officials.”</p><p>For the past two years, North Carolina has had enhanced film incentives to attract TV and movie production companies to shoot in the state. Productions that spend at least $250,000 in the state are eligible for tax credits worth 25 percent of their “qualifying expenses” on films, TV series, commercials or other productions.</p><p>Film, television and commercial productions spent more than $275 million in North Carolina and employed about 14,000 people in the past fiscal year, according to N.C. Department of Revenue records. “Iron Man 3” spent nearly $180 million in the state and put nearly 2,000 residents to work while it filmed, according to a new report from the movie industry's main trade association.</p><p>Wilmington Mayor <a href="http://www.starnewsonline.com/section/topic72"><b>Bill Saffo</b></a> said the state is investing 25 percent and the film industry is paying 75 percent. </p><p>“That is a pretty good investment,” Saffo said. “Here we are talking about jobs and here we have an industry providing good paying jobs and here we are talking about eliminating a good clean industry. I think the investment the state has made in film has definitely paid dividends.”</p><p>Saffo said Catlin's bill not only sends the wrong message to film production companies, but to every company considering a move to North Carolina.</p><p>“Until there is such time they outlaw incentives, you're going to have to play the incentive game,” Saffo said.</p><p>Spinks said the main issue is how incentives are being viewed. They are not corporate welfare but a community's investment in a new business.</p><p>“We've done a horrible disservice to ourselves by calling it an incentive,” said Spinks. “It is money you never had in the first place. That tax base would not be there if the company wasn't there. You pay some money up front and you hope it will create a revenue stream over a long period of time.”</p><p><i></p><p>Kevin Maurer: 343-2339</p><p>On <a href="http://www.starnewsonline.com/section/news41"><b>Twitter</b></a>: @StarNewsKevin</i></p>